Ohio’s 529 Plan, formally known as College Advantage, is a tax-advantaged savings plan designed to help families save for higher education costs. Here is a breakdown of what it encompasses:
Who Can Open an Ohio 529?
Any U.S. citizen or resident alien, 18 or older, with a Social Security number, Tax Identification Number, and U.S. street address, is eligible for an account, regardless of income level. Parents, grandparents, guardians, or anyone committed to helping their children prepare for college may open an account. You can even start one for yourself! The Ohio 529 is open to all U.S. residents, and your beneficiary does not have to attend an Ohio college. Regardless of your state, anyone may open an account to contribute to any public or private U.S. 2-year or 4-year college your child may attend.
Who Is A Beneficiary?
Any U.S. citizen or resident alien of any age with a Social Security number may be named the beneficiary of an Ohio 529 Plan. With every dollar saved now for your beneficiary, you are setting them up for success in their higher-education journey.
How Do I Open An Account?
Opening an account takes less than 10 minutes. You can go online to CollegeAdvantage, or if you prefer to open an account by mail, you can complete the Account Application form. CollegeAdvantage allows you to open an account with minimum contributions as low as $25.
How Does It Work?
When you open an account, you can tailor your investment options to suit your financial and educational timeline. With Ready-Made, Aged-Based Portfolios, Ready-Made, Risk-Based Portfolios, or other investment options, the plan keeps your savings preferences as the utmost priority. All contributions made to your account grow tax-free. Additionally, all withdrawals made are exempt from state and federal tax if put towards higher education expenses.
What Are The Advantages?
Tax Advantages
Ohio 529 offers federal and state tax benefits. On the federal side, earnings grow tax-free, as do withdrawals for qualified education expenses. Ohio residents can deduct $4,000 per beneficiary per year from their state-taxable income.
School Flexibility
It’s hard to know what path your child might take when choosing a college. That’s why 529 plans extend beyond traditional four-year colleges or universities. Community colleges, associate programs, and trade schools also qualify with a 529 account!
Compound Interest
Compound interest plays a crucial role in maximizing the benefits of Ohio 529. Since compound interest is the gains on contributions and earnings, interest accumulates over time. The longer your savings grow, the longer compound interest can grow in the account. The Ohio 529 has excellent growth potential compared to a typical savings account.
Education Expenses
The Ohio 529 covers various educational expenses associated with saving for college. Tuition, room and board, technology, books, and supplies are all covered by the 529.
Investment Options
Different investment options are available through the 529 to fit your higher education goals. From Age-Based to Risk-Based options, two of the most common options for CollegeAdvantage, there are plenty more to consider for your investment plan.
Roth IRA Set Up
If your child with an Ohio 529 Plan decides not to pursue college, you can put the account to other uses. With a 529-to-Roth IRA Rollover, you can put their college savings towards retirement savings, penalty and tax-free. However, note that your account must meet specific qualifications to do so.
Financial Aid Impact
When it comes time to fill out the Free Application for Federal Student Aid (FAFSA), an Ohio 529 account is considered an asset. When owned by a parent, 5.64% of the 529 is considered at maximum. Having an account also does not reduce a student’s chance of receiving scholarships or grants.
Start Planning Today
It’s never too early to invest in your child’s education. If you want to start saving, contact Royal Oak to see what plan best fits your family and makes your educational dreams a reality.
